Oil down on lower than expected drop in U.S. inventories

PostedMay 06, 2017

Ole Hansen, an analyst at Saxo Bank, said the worst of the price capitulation is potentially over but there are multiple reasons behind the latest market weakness which will continue to weigh on prices. OPEC ministers next meet on May 25.

There's a sense of "dejection" in the market that the cuts aren't working, but OPEC can still succeed if it stays the course, according to Energy Aspects Ltd.

Government data showed a modest decline for USA crude inventories and another unexpected increase in gasoline supplies as hopes about summer gas demand are frail. Chinese iron ore futures fell nearly 7 percent in Shanghai after tumbling 8 percent on Thursday. and The Canadian dollar, the Australian dollar and Russia's rouble - some of the world's most commodity- sensitive currencies - were all sent spinning, falling respectively to 14-month, four-month and seven-week lows.

Front-month Brent crude trading volume rose to the highest on record with almost 525,000 lots changing hands, according to Reuters data that extends back to 1988.

Commodity Trading Advisors were among those liquidating their contracts in the day, traders said. Russia, one of the non-OPEC countries to sign up to the cuts, has signaled that Moscow is ready to extend the production cut agreement with the oil cartel.

The plunge has also hit the share prices of major energy companies like ExxonMobil.

Rising U.S. production and stubbornly high inventories remain key drivers of the oil price, but equally important is the level of compliance among members of the Organization of the Petroleum Exporting Countries to their pledge to cut output by 1.2 million barrels per day.

In November past year, OPEC and other producers, including Russian Federation agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels. Oil is being hammered by uncertainty over whether OPEC will extend an agreement to cut production and worries that renewing the deal wouldn't be enough to counter a growing glut. Baker Hughes in its weekly report on rig counts, a metric for exploration and production, surged in the United States by more than 8 percent between March and April.

"At some point, the market should recognize Opec isn't the most important player in the market any more", said Commerzbank's Eugen Weinberg, "That is non-Opec, and, above all, U.S. shale".

Weather

Recent Posts

Posted - May 06, 2017 Tax officials said the settlement also launches a process to determine Google's proper taxation level in Italy going forward. A Google spokesman said the deal "resolved without disputes investigations relating to the period between 2002 and 2015".

Posted - May 04, 2017 Net Interest Income stood at Rs 5,962.2 crore, which grew by 10.31% year-on-year (YoY) and 11.16% quarter-on-quarter (QoQ). However, by the end of the Q4 of FY17, the bank had exhausted its entire contingency reserves for provision for bad loans.

Posted - May 04, 2017 The number of full-time equivalent psychiatrists employed across DHBs had increased by well over 100 over the past eight years. Two free Youth Mental Health First Aid training classes are planned in the mid-valley.

Posted - May 04, 2017 Trade figures also carry political implications as President Donald Trump seeks to revamp USA trade deals with other countries. Year-to -date, the goods and services deficit increased 7.5 percent compared with the same period in 2016.

Posted - May 03, 2017 What began on Friday, with release of Baahubali: The Conclusion, is leading to a monumental box-office run worldwide. The Aare Katika community said that objectionable language has been used against their community in the film .

Posted - May 03, 2017 The Galaxy S8 series comes with a hybrid SIM slot allowing users to use two SIMs or one microSD and one SIM card. And as per KH, around 1 million units of the Galaxy S8 have already been sold from April 7 until Monday.

Posted - May 01, 2017 Trump said. "But next year, maybe we'll make it more exciting for them in Washington and we'll show up". Donald Trump has renewed his attacks on media in a rally to mark his 100th day as US President.

Posted - May 01, 2017 When... did it all get sideways? Stenhouse posted his second top five of the season, matching his result at Phoenix. There was Keselowski, who finished second despite leading for 110 laps and claiming the second stage of the race.